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During the 2020 legislative session a new tax-deductible savings tool, H589, was created to provide first time home buyers the ability to establish savings accounts for down payments and closing costs associated with their first home purchase.
H589 allows individuals to save up to $15,000 per year and up to $100,000 total, or married couples at $30,000 per year up to $100,000 total; all of which can be Idaho income tax deductible.
How does the account work
- An individual or couple goes to a participating financial institution and asks to open a First Time Home Buyer Savings Account.
- If the institution is set up for these accounts, they will be able to deposit funds during the life of the account and at the end of each year, deduct the deposited amount (up to the caps) from their gross income for state income tax calculations.
- If the funds are used for the down payment or closing costs of a first-time home purchase, they are valid.
- There are no additional penalties or interest just the tax collected that otherwise would have been owed.
- Only the first-time home buyer can establish the account.
This is a great tool to try and promote more savings in preparation for first time home buyers and hopefully creating more equity at the time of purchase.
Shannan Berry
Phone: 208-830-7979
Email: sberry@titleonecorp.com